<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934.
For the quarterly period ended March 31, 1997
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
For the transition period from to
--------------------- -----------------------
Commission File Number: 0-18415
--------------------------------------------------------
IBT Bancorp, Inc.
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Michigan 38-2830092
- -------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification No.)
200 East Broadway 48858
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
(517) 772-9471
- -------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
N/A
- -------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
[X] Yes [ ] No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock $6 par value, 786,073 as of April 29, 1997
--------------------------------------------------------
<PAGE> 2
IBT BANCORP, INC.
Index to Form 10-Q
Part I Financial Information Page Number
Item 1 Financial Statements 3
Item 2 Management's Discussion and
Analysis of Financial Condition
and Results of Operations 8
Part II Other Information
Item 6 Exhibits and Reports on Form 8-K 15
Signatures 16
Exhibit Index 17
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
IBT BANCORP, INC.
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
(in thousands) March 31 December 31
1997 1996
----------- -----------
(Unaudited)
<S> <C> <C>
ASSETS
Cash and demand deposits due from banks................. $ 11,272 $ 11,945
Federal funds sold...................................... 6,500 3,175
-------- --------
TOTAL CASH AND CASH EQUIVALENTS 17,772 15,120
Investment securities:
Securities available for sale(Amortized cost of
$51,886 in 1997 and $50,300 in 1996)............... 51,876 50,484
Securities held to maturity (Fair value --
$9,350 in 1997 and $9,509 in 1996)................. 9,369 9,495
-------- --------
TOTAL INVESTMENT SECURITIES 61,245 59,979
Loans:
Commercial and agricultural.......................... 38,890 40,068
Real estate mortgage................................. 137,045 137,998
Installment.......................................... 36,511 37,389
-------- --------
TOTAL LOANS 212,446 215,455
Less allowance for loan losses.......................... 2,768 2,621
-------- --------
NET LOANS 209,678 212,834
Other assets............................................ 11,330 10,809
-------- --------
TOTAL ASSETS $300,025 $298,742
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest bearing.................................. $ 35,792 $ 41,923
NOW accounts......................................... 38,556 39,886
Certificates of deposit and other savings............ 179,440 171,836
Certificates of deposit over $100,000................ 14,039 14,004
-------- --------
TOTAL DEPOSITS 267,827 267,649
Accrued interest and other liabilities.................. 3,552 3,093
-------- --------
TOTAL LIABILITIES 271,379 270,742
Shareholders' Equity:
Common stock -- $6 par value......................... 4,716 4,701
4,000,000 shares authorized; outstanding--
786,073 in 1997 (783,457 in 1996)
Capital surplus...................................... 13,368 13,262
Retained earnings.................................... 10,568 9,916
Unrealized (loss) gain on securities available for
sale - net of a tax benefit of $4 in 1997 and
taxes of $62 in 1996............................... (6) 121
-------- --------
TOTAL SHAREHOLDERS' EQUITY 28,646 28,000
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $300,025 $298,742
======== ========
</TABLE>
See notes to consolidated financial statements
3
<PAGE> 4
IBT BANCORP, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(Unaudited)
(dollars in thousands)
<TABLE>
<CAPTION>
Three Month Period Ended March 31, 1996
-------------------------------------------------------------------------------------------
Unrealized
Net Gain
(Loss) on
Number of Securities Total
Shares Common Capital Retained Available Shareholders'
Outstanding Stock Surplus Earnings For Sale Equity
----------- ------ ------- -------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT JANUARY 1, 1996 703,248 $4,220 $10,220 $10,856 $509 $25,805
Net income 812 812
Cash dividends paid - $0.24 (191) (191)
10% stock dividend 70,243 421 2,669 (3,090)
Issuance of common stock 2,785 16 93 109
Change in unrealized gain on
securities available for sale,
net of $203 tax benefits (395) (395)
------- ------ ------- ------- ---- -------
BALANCE AT MARCH 31, 1996 776,276 $4,657 $12,982 $ 8,387 $114 $26,140
======= ====== ======= ======= ==== =======
<CAPTION>
Three Month Period Ended March 31, 1997
-------------------------------------------------------------------------------------------
Unrealized
Net Gain
(Loss) on
Number of Securities Total
Shares Common Capital Retained Available Shareholders'
Outstanding Stock Surplus Earnings For Sale Equity
----------- ------ ------- -------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT JANUARY 1, 1997 783,457 $4,701 $13,262 $ 9,916 $121 $28,000
Net income 848 848
Cash dividends paid - $0.25 (196) (196)
Issuance of common Stock 2,616 15 106 121
Change in unrealized gain on
securities available for sale,
net of $65 tax benefit (127) (127)
------- ------ ------- ------- ---- -------
BALANCE AT MARCH 31, 1997 786,073 $4,716 $13,368 $10,568 $ (6) $28,646
======= ====== ======= ======= ==== =======
</TABLE>
See notes to consolidated financial statements.
4
<PAGE> 5
IBT BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
(in thousands) Three Months Ended
March 31
----------------------
1997 1996
----------------------
<S> <C> <C>
INTEREST INCOME
Loans......................................... $4,548 $4,160
Investment securities:
Taxable..................................... 700 780
Nontaxable.................................. 164 222
------ ------
TOTAL INTEREST ON INVESTMENT SECURITIES 864 1,002
Federal funds sold............................ 119 102
------ ------
TOTAL INTEREST INCOME 5,531 5,264
INTEREST EXPENSE ON DEPOSITS.................... 2,551 2,460
------ ------
NET INTEREST INCOME 2,980 2,804
Provision for loan losses....................... 123 117
------ ------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 2,857 2,687
NONINTEREST INCOME
Trust Fees.................................... 87 78
Service charges on deposit accounts........... 71 72
Other service charges and fees................ 218 256
Other......................................... 136 98
Net realized loss of securities
available for sale.......................... (8)
------ ------
TOTAL NONINTEREST INCOME 504 504
NONINTEREST EXPENSES
Salaries, wages and employee benefits......... 1,192 1,132
Occupancy .................................... 161 152
Furniture and equipment ...................... 233 244
Other......................................... 589 555
------ ------
TOTAL NONINTEREST EXPENSE 2,175 2,083
INCOME BEFORE FEDERAL INCOME TAXES 1,186 1,108
Federal income taxes............................ 338 296
------ ------
NET INCOME $ 848 $ 812
====== ======
Net income per share $ 1.08 $ 1.05
====== ======
Cash dividends per share $ 0.25 $ 0.24
====== ======
</TABLE>
See notes to consolidated financial statements.
5
<PAGE> 6
IBT BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
(in thousands) Three Months Ended
March 31
----------------------
1997 1996
----------------------
<S> <C> <C>
OPERATING ACTIVITIES
Interest and fees collected on loans
and investments....................................... $ 5,377 $ 5,079
Other fees and income received.......................... 498 670
Interest paid........................................... (2,519) (2,359)
Cash paid to suppliers and employees.................... (2,013) (1,351)
Federal income taxes paid............................... (9)
------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES 1,343 2,030
INVESTING ACTIVITIES
Proceeds from maturities and sales of
securities available for sale......................... 3,840 6,420
Proceeds from maturities of
securities held to maturity........................... 215
Purchase of securities available for sale............... (5,349) (11,147)
Purchase of securities held to maturity................. (1,018)
Net decrease (increase) in loans........................ 3,033 (3,115)
Purchases of equipment and premises..................... (318) (379)
------- -------
NET CASH PROVIDED (USED) IN INVESTING ACTIVITIES 1,206 (9,024)
FINANCING ACTIVITIES
Net decrease in noninterest bearing deposits............ (6,131) (7,844)
Net increase in interest bearing deposits............... 6,309 7,433
Cash dividends.......................................... (196) (191)
Proceeds from issuance of common stock.................. 121 109
------- -------
NET CASH PROVIDED (USED) IN FINANCING ACTIVITIES 103 (493)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 2,652 (7,487)
Cash and cash equivalents at beginning of period $15,120 $21,699
------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $17,772 $14,212
======= =======
</TABLE>
See notes to consolidated financial statements.
6
<PAGE> 7
IBT BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for
a fair presentation have been included. Operating results for the three month
period ended March 31, 1997 are not necessarily indicative of the results that
may be expected for the year ended December 31, 1997. For further information,
refer to the consolidated financial statements and footnotes thereto included
in the Corporation's annual report for the year ended December 31, 1996.
NOTE 2 COMPUTATION OF EARNINGS PER SHARE
The net income per share amounts are based on the weighted average number
of common shares outstanding. The weighted number of common shares outstanding
were 783,823 as of March 31, 1997, and 773,767 as of March 31, 1996.
In February 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 128, Earnings Per Share.
SFAS No. 128 simplifies the standards for computing earnings per share (EPS)
and makes them comparable to international EPS standards. It also replaces the
presentation of primary EPS with a presentation of basic EPS. Since the
Corporation has a simple capital structure, implementation of SFAS No. 128 is
not expected to have an impact on the Corporation's reporting of EPS. SFAS No.
128 is required to be implemented for periods ending after December 15, 1997.
7
<PAGE> 8
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following is management's discussion and analysis of the major factors
that influenced IBT Bancorp's financial performance. This analysis should be
read in conjunction with the Corporation's 1996 annual report and with the
unaudited financial statements and notes, as set forth on pages 3 through 7 of
this report.
THREE MONTHS ENDING MARCH 31, 1997 AND 1996
RESULTS OF OPERATIONS
Net income equaled $848,000 for the three month period ended March 31,
1997, compared to $812,000 for the same period in 1996, a 4.4% increase.
Return on average assets, which measures the ability of the Corporation to
profitably and efficiently employ its resources, equaled 1.13% for the first
three months of 1997 and 1.15% for 1996. Return on average equity, which
indicates how effectively the Corporation is able to generate earnings on
shareholder invested capital, equaled 11.96% through March 31, 1997 versus
12.62% for the same period in 1996.
SUMMARY OF SELECTED FINANCIAL DATA
(Dollars in thousands except per share data)
<TABLE>
<CAPTION>
March 31
--------------------
1997 1996
--------------------
<S> <C> <C>
INCOME STATEMENT DATA:
Net interest income $2,980 $2,804
Provision for loan losses 123 117
Net income 848 812
PER SHARE DATA:
Net income per common share $ 1.08 $ 1.05
Cash dividend per common share 0.25 0.24
RATIOS:
Average primary capital to average assets 10.24% 9.87%
Net income to average assets 1.13 1.15
Net income to average equity 11.96 12.62
</TABLE>
NET INTEREST INCOME
Net interest income equals interest income less interest expense and is
the primary source of income for IBT Bancorp. In accordance with Statement of
Financial Accounting Standards No. 91 "Accounting for Loan Fees," interest
income includes loan fees of $131,000 in 1997 versus $162,000 in 1996. For
analytical purposes, net interest income is adjusted to a "taxable equivalent"
basis by adding the income tax savings from interest on tax-exempt loans and
securities, thus making year-to-year comparisons more meaningful.
8
<PAGE> 9
TABLE 1
IBT BANCORP, INC.
AVERAGE BALANCES; INTEREST RATE AND NET INTEREST INCOME
(Dollars in Thousands)
The following schedules present the daily average amount outstanding for
each major category of interest earning assets, nonearning assets, interest
bearing liabilities, and noninterest bearing liabilities. This schedule also
presents an analysis of interest income and interest expense for the periods
indicated. All interest income is reported on a fully taxable equivalent (FTE)
basis using a 34% tax rate. Nonaccruing loans, for the purpose of the
following computations, are included in the average loan amounts outstanding.
<TABLE>
<CAPTION>
Three Months Ending
March 31, 1997 March 31, 1996
Tax Average Tax Average
Average Equivalent Yield/ Average Equivalent Yield/
Balance Interest Rate Balance Interest Rate
------- ---------- ------- ------- ---------- -------
<S> <C> <C> <C> <C> <C> <C>
INTEREST EARNING ASSETS:
Loans $213,674 $4,573 8.56% $187,031 $4,186 8.95%
Taxable investment securities 43,478 676 6.22 50,582 775 6.13
Nontaxable investment securities 14,189 249 7.02 17,397 336 7.73
Federal funds sold 9,339 119 5.10 7,781 102 5.24
Other 1,369 24 7.01 336 5 5.95
-------- ------ ---- -------- ------ ----
Total Earning Assets 282,049 5,641 8.00 % 263,127 5,404 8.22%
NONEARNING ASSETS:
Allowance for loan losses (2,721) (2,320)
Cash and due from banks 10,178 9,951
Premises and equipment 5,718 5,235
Accrued income and other assets 5,521 5,947
-------- --------
Total Assets $300,745 $281,940
======== ========
INTEREST BEARING LIABILITIES:
Interest bearing demand deposits $ 40,310 268 2.66% 41,388 293 2.83%
Savings deposits 72,082 578 3.21 69,165 546 3.16
Time deposits 119,383 1,705 5.71 109,773 1,621 5.91
-------- ------ ---- -------- ------ ----
Total Interest Bearing Liabilities 231,775 2,551 4.40% 220,326 2,460 4.47%
NONINTEREST BEARING LIABILITIES
AND SHAREHOLDERS' EQUITY:
Demand deposits 37,303 32,794
Other 3,302 3,075
Shareholders' equity 28,365 25,745
-------- --------
Total Liabilities and Equity $300,745 $281,940
======== ========
Net interest income (FTE) $3,090 $2,944
====== ======
Net yield on interest earning assets (FTE) 4.38% 4.48%
==== ====
</TABLE>
9
<PAGE> 10
TABLE 2
IBT BANCORP, INC.
VOLUME AND RATE VARIANCE ANALYSIS
(Dollars in Thousands)
The following table sets forth the effect of volume and rate changes on
interest income and expense for the periods indicated. For the purpose of this
table, changes in interest due to volume and rate were determined as follows:
Volume Variance - change in volume multiplied by the previous year's rate.
Rate Variance - change in the fully taxable equivalent (FTE) rate multiplied
by the prior year's volume.
The change in interest due to both volume and rate has been allocated to
volume and rate changes in proportion to the relationship of the absolute
dollar amounts of the change in each.
<TABLE>
<CAPTION>
Three Month Period Ended March 31, 1997
Compared to
March 31, 1996
Increase (Decrease) Due to
--------------------------
Volume Rate Net
------ ---- ---
<S> <C> <C> <C>
CHANGES IN INTEREST INCOME:
Loans $ 577 $(190) $387
Taxable investment securities (110) 11 (99)
Nontaxable investment securities (58) (29) (87)
Federal funds sold 20 (3) 17
Other investments 18 1 19
----- ----- ----
Total changes in interest income 447 (210) 237
Total changes in interest expense 154 (63) 91
----- ----- ----
Net Change in Interest Margin (FTE) $ 293 $(147) $146
===== ===== ====
</TABLE>
10
<PAGE> 11
TABLE 3
IBT BANCORP, INC.
SUMMARY OF LOAN LOSS EXPERIENCE
(Dollars in Thousands)
<TABLE>
<CAPTION>
Year to Date
March 31
--------------
1997 1996
------ ------
<S> <C> <C>
Summary of changes in allowance:
Allowance for loan losses - January 1 $2,621 $2,248
Loans charged off (94) (28)
Recoveries of charged off loans 118 53
------ ------
Net loans charged off 24 25
Provision charged to operations 123 117
------ ------
Allowance for loan losses - March 31 $2,768 $2,390
====== ======
Allowance for loan losses as a % of loans 1.30% 1.26%
====== ======
</TABLE>
NONPERFORMING LOANS
(Dollars in thousands)
<TABLE>
<CAPTION>
March 31
1997 1996
-------- --------
<S> <C> <C>
Total amount of loans outstanding for
the period (net of unearned interest) $212,446 $189,136
======== ========
Nonaccrual loans $ 191 $ 136
Accruing loans past due 90 days or more 413 601
Restructured loans 0 0
-------- --------
Total $ 604 $ 737
======== ========
Loans classified as nonperforming as a
% of outstanding loans 0.28% 0.39%
======== ========
</TABLE>
To management's knowledge, there are no other loans which cause management
to have serious doubts as to the ability of a borrower to comply with their
loan repayment terms.
11
<PAGE> 12
NET INTEREST INCOME (CONTINUED)
As shown in Tables number 1 and 2, when comparing the three month period
ending March 31, 1997 to the same period in 1996, fully taxable equivalent
(FTE) net interest income increased $146,000 or 5.0%. An increase of 7.2% in
average interest earning assets provided $447,000 of FTE interest income. The
majority of this growth was funded by a 5.2% increase in interest bearing
deposits, resulting in $154,000 of additional interest expense. Overall,
changes in volume resulted in $293,000 of additional FTE interest income. The
average FTE interest rate earned on assets decreased by 0.22%, decreasing FTE
interest income by $210,000 and the average rate paid on deposits decreased by
0.07%, decreasing interest expense by $63,000. The net change related to
interest rates earned and paid was a $147,000 decrease in FTE net interest
income.
The Corporation's FTE net interest yield as a percentage of average
earning assets equaled 4.38% during 1997 versus 4.48% in 1996. The 0.10%
decrease in the net interest yield was primarily a result of a $31,000 decrease
in loan fees and the Corporation's increasing reliance on higher cost deposits
such as certificates of deposit and money market accounts to fund asset growth.
In addition to increased reliance on these funds, the cost of obtaining these
funds has risen in relation to other interest rates. Management expects the
Corporation's reliance on higher cost deposits to fund asset growth to
continue.
PROVISION FOR LOAN LOSSES
The viability of any financial institution is ultimately determined by its
management of credit risk. Loans outstanding represent 71% of the
Corporation's total assets and is the Corporation's single largest
concentration of risk. The allowance for loan losses is management's
estimation of potential future losses inherent in the existing loan portfolio.
Factors used to evaluate the loan portfolio, and thus to determine the current
charge to expense, include recent loan loss history, financial condition of
borrowers, amount of nonperforming and impaired loans, overall economic
conditions, and other factors.
Comparing the year to date period of March 31, 1997 to March 31, 1996,
loans outstanding increased 12.3%. The provision for loan losses was increased
5.1% to $123,000 in the first quarter of 1997 when compared to the same quarter
of 1996. The increase in the provision is due to an increase in total loans
outstanding. As set forth in Table 3, loans classified as nonperforming were
$604,000 as of March 31, 1997, a $133,000 decrease over the prior year. The
allowance for loan losses as a percentage of loans equaled 1.30% compared to
1.26% for the same period in 1996. In management's opinion, the allowance for
loan losses is adequate as of March 31, 1997.
NONINTEREST INCOME
Noninterest income consists of trust fees, deposit service charges, fees
for other financial services, and gains and losses on investment securities
available for sale. There was no change in total income earned from these
sources during the three month period ending March 31, 1997, compared to the
same period in 1996. Significant individual account changes during this period
include a $24,000 increase in brokerage commissions, a $20,000 increase in
gains on the sale of residential real estate mortgages and student loans, a
$9,000 increase in trust income, a $10,000 increase in overdraft fees, and a
$58,000 decrease in ATM fees.
12
<PAGE> 13
NONINTEREST INCOME (CONTINUED)
The Corporation has established a policy that all 30 year amortized fixed
rate mortgage loans will be sold. These loans are accounted for according to
Statement of Financial Accounting Standards No. 125 and are sold without
recourse. The Corporation retains the servicing of these loans. The
calculation of gains on the sale of mortgages exclude at least 25 basis points
for the servicing of these loans. Included in other operating income is a
$36,000 gain on the sale of $4.0 million in mortgages during the first quarter
of 1997 versus a $25,000 gain on the sale of $3.1 million in the same period in
1996.
NONINTEREST EXPENSE
Noninterest expense increased $92,000 for the first three months of 1997
when compared to the same period in 1996. The largest component of noninterest
expense is salaries and employee benefits, which increased $60,000 or 5.3%.
The majority of this increase is related to increased staffing and normal merit
and promotional salary increases. Occupancy and furniture and equipment
expenses decreased $2,000 or 0.5% in 1997. The most significant changes were a
$32,000 decrease in automatic teller machine operating costs, a $25,000
increase in equipment depreciation, and a $6,000 increase in telephone expense.
Other noninterest expenses increased $34,000, a 6.1% increase. The most
significant changes were a $17,000 increase in printing and office supplies, a
$7,000 increase in postage, and a $5,000 increase in FDIC insurance premiums.
ANALYSIS OF CHANGES IN FINANCIAL CONDITION
Since December 31, 1996, total assets increased $1.3 million to $300.0
million. During the first quarter of 1997, major changes in asset mix include
a $2.7 million increase in cash and cash equivalents, a $1.3 million increase
in investment securities, and a $3.0 million decrease in total loans. Deposits
during this period increased $178,000. Interest bearing deposits increased
$6.3 million and noninterest bearing deposits decreased $6.1 million.
LIQUIDITY
Liquidity management is designed to have adequate resources available to
meet depositor and borrower discretionary demands for funds. Liquidity is also
required to fund expanding operations, investment opportunities, and the
payment of cash dividends. The primary sources of the Corporation's liquidity
are cash, cash equivalents, and investment securities available for sale.
As of March 31, 1997, cash and cash equivalents as a percentage of total
assets equaled 5.9%, versus 5.1% as of December 31, 1996. During the first
three months of 1997, $1.3 million in net cash was provided from operations,
investing activities provided $1.2 million, and financing activities provided
$103,000. The accumulated effect of the Corporation's operating, investing,
and financing activities was a $2.7 million increase in cash and cash
equivalents during the first three months of 1997.
In addition to cash and cash equivalents, investment securities available
for sale are another source of liquidity. Securities available for sale
equaled $51.9 million as of March 31, 1997 and $50.5 million as of December 31,
1996. The Corporation's liquidity is considered adequate by management.
13
<PAGE> 14
CAPITAL
The capital of the Corporation consists solely of common stock, surplus,
retained earnings, and unrealized net loss on investment securities available
for sale; and increased approximately $646,000 since December 31, 1996. As of
March 31, 1997, the Corporation's capital included $6,000 unrealized loss on
securities available for sale.
There are significant capital regulatory constraints placed on the
Corporation's capital. The Federal Reserve Board's current recommended minimum
tier 1 and tier 2 capital to average assets requirement is 6.0%. The
Corporation's tier 1 and tier 2 capital to average assets, which consists of
shareholder's equity plus the allowance for loan losses, was 10.2% at March 31,
1997.
The Federal Reserve Board has established a minimum risk based capital
standard. Under this standard, a framework has been established that assigns
risk weights to each category of on- and off-balance sheet items to arrive at
risk adjusted total assets. Regulatory capital is divided by the risk adjusted
assets with the resulting ratio compared to the minimum standard to determine
whether a bank has adequate capital. The minimum standard is 8%, of which at
least 4% must consist of equity capital net of goodwill. The following table
sets forth the percentages required under the Risk Based Capital guidelines and
the Corporation's ratios as of March 31, 1997:
PERCENTAGE OF CAPITAL TO RISK ADJUSTED ASSETS:
<TABLE>
<CAPTION>
IBT Bancorp
Actual
Required 03/31/97
-------- --------
<S> <C> <C>
Equity Capital 4.00 15.78
Secondary Capital* 4.00 1.25
---- -----
Total Capital 8.00 17.03
==== =====
</TABLE>
* IBT Bancorp's secondary capital consists solely of the allowance for
loan losses. The percentage for the secondary capital under the required
column is the maximum allowed from all sources.
14
<PAGE> 15
PART II - OTHER INFORMATION
Item 6 EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 27 - Financial Data Schedule
(b) No reports on Form 8-K were filed or required to be filed during
the quarter ended March 31, 1997.
15
<PAGE> 16
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
IBT Bancorp, Inc.
----------------------------------
Date: April 29, 1997 /s/ David W. Hole
---------------------- -----------------------------------------
David W. Hole, President/CEO
/s/ Dennis P. Angner
-----------------------------------------
Dennis P. Angner, Treasurer
(Principal Financial Officer)
16
<PAGE> 17
IBT BANCORP, INC.
EXHIBIT INDEX
Exhibit
No. Description Page Number
- ------- ------------------------- -----------
27 Financial Data Schedule 18
17
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 11,272
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 6,500
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 9,369
<INVESTMENTS-CARRYING> 9,350
<INVESTMENTS-MARKET> 51,876
<LOANS> 212,446
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<DEPOSITS> 267,827
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<LONG-TERM> 0
0
0
<COMMON> 4,716
<OTHER-SE> 23,930
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<INTEREST-LOAN> 4,548
<INTEREST-INVEST> 864
<INTEREST-OTHER> 119
<INTEREST-TOTAL> 5,531
<INTEREST-DEPOSIT> 2,551
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<SECURITIES-GAINS> (8)
<EXPENSE-OTHER> 2,175
<INCOME-PRETAX> 1,186
<INCOME-PRE-EXTRAORDINARY> 1,186
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 848
<EPS-PRIMARY> 1.08
<EPS-DILUTED> 1.08
<YIELD-ACTUAL> 4.38
<LOANS-NON> 191
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<ALLOWANCE-OPEN> 2,621
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<ALLOWANCE-CLOSE> 2,768
<ALLOWANCE-DOMESTIC> 2,768
<ALLOWANCE-FOREIGN> 2,768
<ALLOWANCE-UNALLOCATED> 2,768
</TABLE>
